PRESIDENT Rodrigo R. Duterte has signed an executive order (EO) setting up a registry for franchise holders officially classified as micro-, small-, and medium-sized enterprises (MSMEs), in order to better track and regulate franchising activity.
The Palace said in a statement on Monday that under the order, which was signed by Executive Secretary Salvador M. Medialdea on behalf of Mr. Duterte last week, franchisors are responsible for registering their franchise agreements with the Department of Trade and Industry.
The order applies to members of authorized franchise associations. It also requires franchisors who are not yet part of such associations to register their franchise agreements with MSME franchisees within 30 days of the order taking effect.
The order requires full disclosure of any pre-signing, initial or recurring fees; detailed responsibilities of the franchisor and the MSME franchisee; and non-discriminatory provisions.
The registry must also track terms and conditions concerning pre-termination, termination or expiration of the franchise agreement; provisions for “cooling off” periods during which MSME franchise holders decide to exercise their option to terminate the agreement; and remedies available if any party is in breach of the agreement.
“There is a need to intensify government efforts to strengthen the franchising industry to help businesses, especially MSMEs, by developing a transparent and business-friendly environment, and promoting fair and equitable practices,” according to the order. — Kyle Aristophere T. Atienza